Fitch: Greece ‘will default’, likely to downgrade euro sovereigns

By: Jonathan Boyd | 17 Jan 2012

Edward Parker, managing director for Fitch’s Sovereign and Supranational Group in Europe, the Middle East and Africa, has been widely quoted telling a Stockholm conference today that the rating agency is likely to call Greece bankrupt, and apply downgrades to ratings on other eurozone member states.

“It is going to happen. Greece is insolvent so it will default. So in that sense it shouldn’t be a surprise to anyone,” Parker is qutoed by Reuters.

However, Fitch’s rating activity will not stop there. Sweden’s Dagens Industri quotes Parker adding that his firm will downgrade a number of countries in the next two weeks.

Parker said that he was counting on one or two step downgrades for most of the affected countries.

Fitch put France, Spain, Belgium, Slovenia, Italy, Ireland, Cyprus and Portugal under review in December, DI said, which means that France in particular risks losing its AAA status from yet another agency, following last week’s move by Standard & Poor’s.

The announcement is all the more remarkable because Parker’s colleague at Fitch David Riley said just last week that the agency did not see France as a ‘crisis country’, and that it would be able to maintain its top credit rating if sovereign debt could be stabilised at around 90% of GDP.